For those who are involved in disposing of a UK-based property, either by sale or other means, there is a change coming into effect on 6 April 2020 that will have a significant impact on any Capital Gains Tax payable.
What is Capital Gains Tax?
According to the gov.uk website, “Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive.” The website goes on to explain that some assets are tax free and that CGT is not payable if all the gains in one year are under your tax-free allowance.
There are two rates of CGT – one for property and another for other assets. Capital Gains Tax is payable on the gain made from the sale of a property that isn’t a main residence (though there are exceptions). CGT liable properties include buy-to-lets, business premises and second homes.
The change coming into effect on 6 April 2020
Currently, CGT due on a property must be paid by the 31 January following the tax year in which the sale took place. If, for example, the completion of your property sale is due to occur on 2 September 2019, then any CGT would not be due until 31 January 2021, ie. nearly 16 months later. However, under draft legislation proposed by the government, from 6 April 2020, any CGT on a property sale will be payable within 30 days of the sale’s completion.
If you are planning a property sale on which CGT may be payable and you would like advice or further information, drop me a line at firstname.lastname@example.org or call me on 0191 567 8611.
As one of the leading firms of accountants in the North East, with offices in Newcastle, Sunderland and Jarrow, we have the expertise to advise you on a wide range of tax related issues. If you would like to speak to one of our local experts, please call 0191 567 8611.